The health and wellbeing impact of unemployment: cross-country comparative analysis

Abstract It is well established that unemployment is detrimental to health and wellbeing. However, less is known about how the impact varies across welfare state contexts and expenditures. Cross-country comparative analysis could indicate important differences to inform welfare state policy reforms. The Comparative Panel File (CPF) was used to combine household panel survey data from seven countries (UK, US, Germany, Australia, South Korea, Switzerland, and Russia). The analysis covers 2001 to 2019 using a sample of the working-age population (age 25 to 64). Country-specific fixed effects models were estimated separately to investigate the impact of transitions between employment states on wellbeing years (WELLBYs) for all countries, and quality adjusted life years (QALYs) for three countries with available data. Additionally, a pooled country analysis investigates the potentially modifying effects of specific welfare state expenditures on wellbeing. Transitions from employment to unemployment negatively impacted health and wellbeing in all countries and for both genders, as expected. However, substantial between-country variation was observed. For example, the negative impact of transitions into unemployment for males in the UK was more than double the equivalent estimate for Australian. Gender differences in estimates were also less pronounced in Australia compared to the UK. Government spending on passive labour market policies (e.g. unemployment benefits) were estimated to be beneficial to health across the working-age population, whether or not individuals were affected by an employment state transition. The estimated monetary value of addressing wellbeing impact of unemployment was substantially larger than the equivalent figure for health impacts. Welfare state policies influence the negative impact of unemployment on health and wellbeing. Specific welfare state expenditures can be altered to modify these impacts and reduce the substantial costs of unemployment.